- A good recovery in USD demand triggers further selling around AUD / USD on Monday.
- A combination of factors weighs on investor sentiment and benefits the safe haven USD.
- Some subsequent selling below the 0.7100 level should pave the way for a further drop.
The pair AUD/USD has moved lower and is trading near the lower end of its daily trading range, just above the 0.7100 level, at the start of the European session.
The pair has witnessed some new sales on the first day of a new week and has returned positive movement from the previous day to seven-day highs, around the region of 0.7157. A radical change in Global risk sentiment has benefited the safe haven US dollar and it has turned out to be a key factor that has weighed on the Australian dollar, with the highest perceived risk.
Global risk sentiment took a hit on Monday amid rising market concerns that the second wave of coronavirus infections could hamper the global economic recovery. This is in addition to uncertainty over US fiscal stimulus measures and political uncertainty in the US, which has forced investors to take refuge in the safe haven USD.
US House Speaker Nancy Pelosi remained optimistic about the stimulus talks and said Sunday that she expected a response from the White House on Monday regarding the spending plan. However, investors do not seem convinced that US lawmakers can reach an agreement before the presidential election Americans amid strong opposition from Senate Republicans.
For now, the AUD / USD pair seems to have broken three consecutive days of winning streak. A sustained break below the 0.7100 level should pave the way for additional intraday weakness. The pair could then accelerate the decline towards the intermediate support at 0.7045 before aiming to challenge the key psychological level of 0.7000.
Market participants are now awaiting the US economic calendar, which features the only release of new home sales figures. The data, along with broader market risk sentiment, US stimulus news, and developments related to the coronavirus saga, will influence USD price dynamics. This, in turn, could generate some significant trading opportunities around the AUD / USD pair.
AUD / USD technical levels
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Credits: Forex Street
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